Bond & Equity Outlook for April 22

DATA RELEASES 04/22/10

  • 8:30 AM US PPI (0.4%, EX # 0.1%)
  • 8:30 AM US JOBLESS CLAIMS (460 K)
  • 10:00 AM US EXISTING HOME SALES (5.25 M), FHFA HOUSE PRICE INDEX
  • 10:30 AM EIA INVENTORY NUMBERS
  • 11:00 AM US 5 YR TIPS, 2YR, 5YR, 7 YR
  • EARNINGS PEPSICO, PHILIP MORRIS,QUALCOMM ,CREDIT SUISSE, AMGEN

DATA RESULTS 04/21/10

  • EIA INVENTORY NUMBERS (CL/1.9M VS.-2.2M, RBOB 3.6M, DISTIL 2.1M, CAP UTIL 85.9)
  • EARNINGS: WELLS FARGO (0.45 EPS), MCDONALDS $1.00 EPS), BOEING (0.70 EPS), MORGAN STANLEY (0.99 EPS), ALTRIA (0.39 EPS)

US DEBT REVIEW AND OUTLOOK
US Treasuries rallied as market participants sold out of riskier sovereign debt as the latest developments in the Greek fiscal crisis drama prompted participants to sell riskier sovereign debt and undertake a flight to quality as the yield spread between Greek and German debt widened to a near record level. Speculation that the fiscal nightmare of Greece may spread like the coverage of one’s old history textbook (Greece, Italy, Portugal, Spain, England) hung over the relatively strong earnings release, including McDonalds and Apple. The apparent inevitability of global rate hikes may also be ramping up the uncertainty factor with regards to the sustainability of global recovery.

US Bond market participants seem to be taking a mixed view toward Thursday’s Treasury auction announcements for next week. The US 2, 5, 5 year TIPS and 7 year notes auctions are expected to set a record weekly supply level near $130 billion, however this is being by many participants as the peak of supply as revenues from other sources and the perceived improvement in the economy offer positive contributions to the Federal balance sheet.

TECHNICALLY SPEAKING, US 30 Year futures have filled in the gap from its nearly 2 handle drop in late March. A breakout to the upside may occur if the market breaks 117-30. A close above this level could lead to a test of 118-12. The recent rally may falter without further fundamental support. Profit taking from long positions could lead to a pullback to 116-19. Downside target for the contract sets up at 115-19.

US EQUITIES REVIEW AND OUTLOOK
US stocks lost some ground on Wednesday as levels of uncertainty regarding the Euro zone’s economic recovery trumped a series of strong earnings from the technology and consumer products sectors. Equity traders appeared ready to take profits off the table, selling into strength. Energy stocks were among the worst performers as crude oil prices hit resistance. The financing and repayments terms for Greece were being outlined in a meeting with the IMF. Additional pressure on financials came about on expectations that a US Financial Regulation bill will be introduced in the Senate. The IMF is also calling for additional taxes on banks to shift the bailout from taxpayers to this reserve fund.

All of these elements capped early gains from the strong earnings results out of companies such as Apple, McDonalds, and Freeport McMoRan which increased its dividend payment.

TECHNICALLY SPEAKING, June S&P futures continue to range trade. Support remains at 1192.50, with a break of this level setting up retest of 1185.50. Resistance sets up at 1213.25. A close above this level may set up a move to test 1222.50.

COMMODITY HIGHLIGHTS
Crude Oil closed weaker. The early gains were eroded by a bearish inventory report showing unexpected builds in crude and RBOB gasoline.

NY Cotton continued to gain after Tuesday’s limit up move sparked by the announcement that India will cease exports in order to stabilize domestic prices. The market closed significantly off its highs as pre market catch up and option strategists pushed the market to its best levels on relatively thin volume. Market may still be vulnerable to continued price spikes, particularly in the front months, as the commodity is in significant backwardation.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US M0 (US 30 YRS)

116-24

117-20

116-20

117-19

+27/32nds

SP M0 (S&P 500)

1204.50

1207.50

1135.30

1200.40

-5.00

Prepared by Rich Roscelli & Paul Brittain. PLEASE VOICE YOUR MARKET OPINIONS, THOUGHTS, AND QUESTIONS. EMAIL TO RICH@BINVSTGRP.COM. Additional Information can be found at WWW.WHITEHALLVEGAS.COM.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Whitehall Investment Management, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

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